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Housing America’s Seniors: Demand, Supply, and Public Policy

December 18, 2014 01:00 PM

Affordable and accessible housing is a central tenet for people of all ages, especially so for older adults over the age of 65. Housing is often the largest cost in most household budgets, which directly affects day-to-day financial security and future wealthbuilding. Over the next three decades, the number of American households headed by people of age 65 and older will increase dramatically. What are their housing needs, how will they be met, and what effect will the post-recession increase in renters and homeowners have over the long term? The Urban Institute recently hosted a forum to tackle these questions and pose possible policy solutions.

“The older adult population has grown tremendously since the Baby Boomer generation turned 50 at the end of the last century,” said Herbert. “The population aged 65 and over is projected to hit 73 million by 2030, an increase of 33 million in just twenty years. By 2040, the population aged 80 and over is projected to increase another 28 million, which is three times what that population segment was in 2000.”

Also important is that this older population will be more diverse as the recent wave of immigrants over the last two decades reaches the 50-year-old mark. The growing diversity will bring a significant shift in housing demand. “This reflects the different housing situations and financial circumstances of minorities, which has an impact on multigenerational housing, institutional care, and also the financial and personal situations of their families,” said Herbert. “As a group, minorities have lower rates of homeownership, lower median incomes, and fewer assets—all of which affect housing options as they grow older.”

Herbert shared a lot of data regarding housing trends amongst older Americans, including ethnicities, health risks and financial stress, and housing tenure and income. Of particular focus was the 80-and-older segment, which sees variables such as families moving in or out of the home, disabilities, or death of a spouse giving rise to new housing needs and preferences. “Finding more affordable housing may prove to be a greater concern for those living on fixed incomes,” said Herbert. “Financial constraints also prevent people from adapting to their changing circumstances, however, with many preferring to stay in their homes for as long as possible because they cannot afford to move.”

Engelhardt indicated a strong correlation between socioeconomic status and health, especially in the aging population. “Health and housing appear complimentary, partially from the idea for people to simply ‘age in place,’” he said. “As such, we need to address both housing and health together when looking at policy with regards to the older population segment.” His research showed that renters aged 65 and older were in poorer health than mortgaged homeowners of the same age group. “Twenty-eight percent of renters are in some form of senior housing.”

The most identifiable issue, however, remains that of low income for these population segments. “It creates financial insecurity,” said Engelhardt. “In 2010, households enrolled in Medicare devoted nearly 15 percent of their annual spending to health care-related expenditures.” In 2009, 48 percent of homeowners and 58 percent of renters over the age of 65 spent 30 percent or more of their income on housing and utilities. Such factors create pressures on household budgets, especially in low-income households; 9 percent of those 65 and older in 2011 were living below the federal poverty line.

With a large part of the housing problem for the older population coming from inadequate income, policymakers need to be looking at firming up income programs. “Social Security, believe it or not, is probably our best housing policy at the moment,” said Engelhardt. Research shows that there is a steady increase of homeowner stability over the last forty years in the 65 and older bracket, where the other generations show a typical wave pattern. “Home ownership and living arrangements are very sensitive to Social Security,” said Engelhardt. “Even a small change to the program can have a large effect on elderly housing. Bolstering Social Security and other income support programs should be a priority.” He even suggested that roundabout reductions through changes in the Affordable Care Act, Medicaid, and Medicare can have a positive effect, as home modifications can directly affect healthcare costs.

“There’s still time for the nation to prepare for the rising needs of older adults,” said Herbert. “We need public policies that promote livability, broaden housing options, coordinate health and housing programs, and increase long-term support services. This will have positive benefits to quality of life and financial sustainability—but the time to act is now, not later.”